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Next Digital loss deepens to $394 million on back of weak ad sales

Next Digital has recorded revenue of HK$1,783.8 million during the year ended 31 March 2017, a decrease of HK$543.9 million (23.4%) against the figure of HK$2,327.7 million earned in the previous 12 months.

The loss was widened to HK$394 million from that of HK$324.2 million loss in the year-ago period.

The media company attributes its drop to a significant decline in advertising revenue of the group’s print publication in both Hong Kong and Taiwan.

Other factors include the downsizing and consolidation of the group’s newspapers publication and printing division, books and magazines publication and printing division, the restructuring of Taiwan Apple Daily, Taiwan Next Magazine and Apple Daily, as well as Next Magazine in Hong Kong.

It ceased the publication of FACE and ME! in April and May 2016 respectively. In June 2016, Ketchup ceased its print version and switched its focus to solely digital. Auto Express and TradingExpress have been packaged with Next Magazine and Eat & Travel Weekly as a new bundle to streamline the magazine’s operations and reduce operating costs.

During the six months ended 30 September 2016, the total revenue of the newspapers publication and printing division stood at HK$474.1 million, representing a decrease of 27.1% or HK$176.5 million.

The company also associates the decrease with the drop in circulation income of the group’s publications due to the continued shift in reading habits towards free online media over printed properties.

On the digital front, the digital business division’s revenues, consisting primarily of online advertising revenue, together with content licensing payments, games and content sponsorship, and in-app purchase of virtual products, amounted to HK$649.7 million during the year under review. This represents a decrease of 1.5% on the previous year’s figure of HK$659.7 million, of which, around 76.0% was generated in Hong Kong while the remaining was from Taiwan and others.

Next Media’s digital division recorded a segment loss of HK$1.2 million compared with a segment profit of HK$35.2 million in the previous 12 months. It explains in the press release that it was faced with “strong competition not only from an increasing arrays of new local entrants on digital media, but also global platforms and social media that are vying for the same advertisers’ spending as Apple Daily“, which had in effect dampened their topline momentum for the moment.

“As we further improve our technology infrastructure to gear up for a more proactive monetisation strategy, we believe there is a positive prospect for further growth,” it adds.